Capitalist and socialist economies tend to defer in most aspects with the arguments claiming that capitalism enhances selfish and individualism whereas socialism enhances cohesion. However, are these arguments valid or dubious? This essay compares the United States and Sweden’s economic indicators to determine the validity of these arguments. The United States GDP is approximately $15.68 trillion, which is second in the world whereas Sweden’s GDP is $525.74 and 30 times less than that of the U.S. This data results in the GDP per capita being 79.7% and 66% for the U.S. and Sweden respectively. Sweden’s inflation rate increased to 2.3% from 2.0% making its inflation higher than the average inflation rates, which is 2.2%. Sweden’s inflation rate of 2.3% is slightly lower than the 2.4% inflation rate of the U.S. Lastly, unemployment rates in the U.S. decreased to about 3.7% in 2018 from 3.9% in the last two years. Similarly, Sweden’s unemployment rates decreased to an average of 5.95% from 1980 to 2018. The data depict that the U.S. is better economically than Sweden.
Advantages and disadvantages of socialism
The main advantages of socialism are the balance between earnings and wealth. The essence that socialist governments control most of the utility companies makes it possible for all people to benefit from housing and other regulated goods and services thus enabling equity. The extension of equity enhances health services for all, as services are accessible at lower costs. The other major benefit is enhancing collaboration by breaking social barriers with everyone playing a role in the improvement of society. The essence that everyone owns the factors of production makes everyone a core figure in society.
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The major cons of socialism are the excessive government control that hampers private firms and technological advancement. Socialist governments’ control of all major companies diminishes productivity. Lastly, the socialistic ideologies hinder personal success and motivation, as people tend to depend on each other rather than improve their lives.
Advantages and disadvantages of Capitalism
Capitalism embraces productivity. Therefore, private firms are the cornerstone of productivity. This characteristic enhances efficiency as privatization enhances efficiency and effectiveness in production. Hence maximum utilization of resources. The other vital advantage is flexibility and innovative aspects of capitalism. In the bid to maximize profits, privatization in the capitalist economy embrace innovations to help reduce costs and limit wastage. Lastly, capitalism rewards individual efforts with the income and wealth being a factor of the efforts one puts in investment or labor.
The main disadvantages of capitalism are the overemphasizing of money in everything. The need to maximize profits inhibits social products thus diminishing the living standards of the low-income earners. The other con of capitalism is inequalities that widen the wage and wealth gaps. For instance, owners of companies tend to pocket billions whereas these workers do not enjoy such huge profits.
Question 2
Apple’s move to price new iPhones at extremely high prices makes sense based on the demand and supply concept. Demand is the willingness and ability to purchase a good or service whereas supply is the quantity available in the market. In a competitive market, the higher the demand the higher the cost if the supply is constant. Prices can also increase if the supply decreases and the demand remains constant. In the case of a new iPhone, Apple expects that people are waiting for the launch, therefore; demand is much higher than the supply. Therefore, it has to raise the prices to limit the demand to a number that the company supply without having to increase its production.
